US Economic Policy

The year 1998 marked the 20th anniversary of airline deregulation in the U.S. Originally viewed as a means to increase competition in an industry dominated by a handful of monolithic airlines, deregulation has spurred a rash of recent debate about whether, in fact, it has achieved just the opposite: the consolidation of the industry into a closed market. This report provides a thorough analysis of five basic areas of domestic airline competition: city pair competition, price competition, potential barriers to entry, airline financial health, and the tax burden on airlines. The report ultimately concludes that the U.S. aviation industry is substantially, and measurably, more competition now than it was 20 years ago, accruing benefits not only to the industry itself, but to the American consumer as well.